When is InvestEngine, giving us the flexibility of Limit Orders,
People on Trading212 have big advantage over us here in IE, they can buy ETFs at Great prices by setting Limit orders.
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How is it a big advantage? Retail investors donāt have the skills to price ETFs better than the market makers trading them. The crypto kids cannot identify mispricing and arbitrage opportunities better than the Authorised Participants. Iām not convinced limit orders are any big advantage for 99% of retail investors.
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Sat by and helplessly watched my silver etf go from 6% up this morning only to be sold at 3:30ish this afternoon at the lowest point of he day and at a 1% loss for meā¦ā¦and nothing i could do about it. Limit orders and being able to buy and sell my ETFs when i want is a massive advantage for me, I appreciate it may not be so for others and also that its my mistake that i didnāt fully investigate how IE works when i transferred my ISA in and am now having to cash it in to be able to transfer out (no in-specie transfers out unfortunately). So in answer to the original post limit orders get a massive plus vote from me, i use them all the time on the other platforms iām on, and i only hold ETFs.
When you request to buy/sell on IE itās done at market prices, you have no control on what you pay/get. The use of limit orders on T212 means you can specify you only want to buy when itās below a specified price or sell once a price has reached. This is definitely crucial on small ETF where the spread can be large.
I doubt we will get it on IE because of their pricing model. By doing it all at the same time it means they keep the bid-ask spread by doing it internally. For instance lets say an ETF is showing Ā£100 on T212, itās bid price could be Ā£101 and ask price Ā£99. If IE can match a buyer to a seller from within its users it keeps the spread rather than the money is paid/received externally to the wider market. No detriment to you as buyer/seller but it allows the platform to be fee free.
It all depends on your investment style. Are you wanting to be a day trader (buy low and sell once its gone up) or are you doing long term investments. The IE set up is, IMO, very useful for the long term investor wanting to employ a āPound Cost Averagingā policy of regularly investing every week/month to grow their wealth over time. Less likely for panic selling because a stock has dropped 5% one day only for it to recover a few days later.
Surely if the bid price was Ā£101 and ask price Ā£99 then I could immediately make Ā£2 by arbitrate, and I would be asking what is the maximum order size and where can I get as much leverage as possible.
You would pay Ā£101 to buy but then sell it back at Ā£99, so make a Ā£2 loss. Prices were theoretical example. Limit orders for retail investors is about more control for the individual, not identifying mispricing. Though donāt think they work well in how IE operates.
You have until 2pm to kill the order.
Im not sure why they choose to trade around 3pm , when volatility increases at US market open as news hits the wires and then US jocks hit the panic buttons.
personally i think that this is a poor time to trade as a volatile opening increases the chances of buying a spike or selling on a dip that later returns to the mean.
i think the platform should move the trading time to either a lot earlier (in the morning) or to when the UK market closes or just have more trading points. I dont think that the current trading execution works well for investors who want a price executed to near to where they placed the order.
Fell sharply from 2pm with the biggest fall reaching the lowest between 15:00 and 15:30, my order was traded at 15:22. Iāve chosen to move away from IE due to the perceived lack of control of when trades take place. I know this wont matter to many but for me the difference between ETFs and unit trusts is the fact that ETFs change price throughout the day rather than once a day like unit trusts and so lend themselves very much to timing based trades/limit orders, and this was a big reason why i switched from traditional unit trusts to ETFs. Iām not criticising IE, but i do hope as a platform it listens and responds positively to feedback, great point youāve made about when trades are carried out, perhaps implementing some kind of limit on sells if they fall sharply from when the order was placed, shifting the timing, perhaps 2 windows per day would be a big improvement, and better communication around Commodity ETFs that were pulled would be good for the future. Agree that its set up for the long term regular investor and this is where its strength lies, not at all for day type trading or trading that requires a fast response to the market.
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You sell to a counterparty who bids you a price, and buy from a counterparty at the price they ask. So no, I would sell at Ā£101 and buy at Ā£99. Instant arbitrage.
With respect, isnāt this whole conversation completely missing the point of InvestEngine as a platform?
Itās designed for long term accumulation, not trying to make gains on intraday pricing volatility. Such strategies are completely irrelevant for most amateurs, who would probably lose money anyway.
Trading 212 is specially designed for that purpose, so I donāt understand why you would try this on InvestEngine.
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For me it was a lack of research, i hold my hands up to this, and yes T212 is much better suited for my kind of investing (i have a SIPP with ii and they are great too) and i just didnāt realise how much of an impact IE would have on my investment style. It is worth noting that people have different investment objectives and drivers and are at different stages in their lives and have different amounts to invest, so its not one size fits all black and white thing. Again, i would applaud IE for long term investors perhaps investing on a monthly basis where low costs and pound cost averaging are key, just not good in my opinion if you have significant amounts in more fluid investments and you need to be able to react quickly to market changes, again not for everybody. About to exit IE now so wishing you all a great new year and hope the platform continues to grow, iām sure it will will.
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Another thumbs up for the ii SIPP from me too.